More confirmation of the weakness of Australia's retail industry came out on Monday as investment firm Premier reported a 49 per cent drop in profit for its retail businesses.

Premier owns fashion stores Just Jeans, Peter Alexander, Smiggle and dotti, which registered a 2011 full-year profit of $40.5 million. The drop in the group's net profit was attributed to the slump suffered by the retail sector and an $11 million one-off costs linked with Premier's strategic review of its retail assets.

Mark McInnes, chief executive officer of Premier Retail, pointed to the first six weeks of the season as a very challenging one as the country's economic environment and consumer confidence continue to drop throughout August.

As a result, underlying profit before tax was $73.3 million, while after tax profit slid down to $51.5 million.

"Given the macro environment, we have reacted quickly with an accelerated cost reduction program.... Our inventory is clean in all brands, and all our new Peter Alexander and Smiggle stores are on track to open pre-Christmas," Mr McInnes said in a statement.

With the 49 per cent drop in profit, Premier declared a final dividend of 18 cents.

Premier forecast that its retail businesses would earn in 2012 $80 million to $95 million before interest and tax if the firm could successfully implement strategic initiatives and if the macro environment would stabilize and Yuletide holiday sales would go up.

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